Should investors still believe in gold?

Should investors still believe in gold?

Gold has dulled a lot lately but investors could still take a shine to it, say experts. Since the start of the year, its price has plunged 16.8 per cent (in dollar terms).

Institutional and hedge fund investors sold their holdings for opportune trades in other asset classes or in Japanese markets, even as US Fed Chairman Ben Bernanke hinted at cutting back quantitative easing while the dollar rose against major global currencies.

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Image: Gold turtles are displayed at a jewellery shop in Seoul, South Korea.Photographs: Jo Yong-Hak/Reuters

Should investors still believe in gold?

Nevertheless, Bagga feels other financial assets such as debt are a better investment than gold at the moment. He, therefore, recommends that investors bring down their gold holding from 5-10 per cent to two to four per cent of their portfolios.

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Image: Gold jewellery is pictured on a stand at the Valenza international jewels exposition in Valenza, northern Italy.Photographs: Alessandro Garofalo/Reuters

Should investors still believe in gold?

Lakshmi Iyer, head, fixed income and products, Kotak Mutual Fund, said: "Demand for gold is still high in India and at lower levels, a lot of people are coming ahead and buying gold. Gold can still be a part of your asset allocation."